Keppel DC REIT acquiring two data centres for $585 mil; launches equity fund raising
SINGAPORE (Sept 16): Keppel DC REIT is acquiring a 99% stake in Keppel DC Singapore 4 and 1-Net North Data Centre for a total consideration of $585.1 million.
The proposed acquisitions are expected to be “highly accretive” to the REIT’s Distribution per Unit (DPU), says the manager of Keppel DC REIT.
The manager also plans to fund the acquisitions with proceeds with a fully underwritten equity fund raising exercise of $473.8 million, as well as debt.
Keppel DC Singapore 4 (KDC SGP 4) is a five-storey carrier-neutral and purpose-built colocation facility which is 92% occupied. The remaining 1% stake in KDC SGP 4 is to be acquired by an entity of Keppel Data Centres Holding. The centre is also located close to two of the REIT's existing data centres, Keppel DC Singapore 2 and Keppel DC Singapore 3.
On the other hand, 1-Net North DC (1-Net North DC) is a five-storey purpose-built facility on a triple-net master lease with 17 years remaining, and an option to renew for a period of 7.6 years.
The centre is located just outside the Woodlands Regional Centre, a planned commercial hub that will serve as the Northern Agri-Tech and Food Corridor.
The agreed value for the 99% stake in KDC SGP 4 is $384.9 million. Meanwhile, 1-Net North DC has an agreed value of $200.2 million.
Both acquisitions should be completed by 4Q19.
Keppel DC REIT’s manager says the acquisitions will strengthen the income resilience and stability of the REIT's portfolio.
The pro-forma occupancy rate for the enlarged portfolio is expected to improve to 94.1% from 93.2%, based on the portfolio occupancy rate as at June 30.
Portfolio weighted average lease expiry (WALE) by leased lettable area is also expected to improve to 8.9 years post-completion from 7.8 years.
When completed, the REIT's assets under management will grow by 30.7% to $2.58 billion, comprising 17 data centres in key data centre hubs globally, spanning an aggregate lettable area of 1.41 million sf.
Chua Hsien Yang, CEO of the manager, says, "Singapore is among the world's fastest-growing data centre markets, driven by demand from internet enterprises as well as the IT services, telecommunications and financial services sectors. The strategic acquisitions of these two quality data centres will strengthen Keppel DC REIT's foothold in this robust market. With the proposed acquisitions, Keppel DC REIT will have data centres across the Northern, Central, Eastern and Western regions of Singapore, which puts us in a strong position to serve a wider range of clients."
The seller for KDC SGP 4 is a 70:30 joint venture between Alpha Data Centre Fund., which is managed by Alpha Investment Partners, and Keppel Data Centres Holding.
The sellers for 1-Net North DC are Keppel Infrastructure Trust's subsidiary with a 51% stake in the data centre, and Shimizu Corporation's subsidiary with a 49% stake in the data centre.
Units in Keppel DC REIT are trading at $1.80 on Monday, up 32.4% year to date.
